Wall Street Breakfast: Must-Know News

September 28, 2012  | 1 commentby: Wall Street Breakfast  |  includes: ACI, ANR, BAESY.PK, CNX, CVS, EADSY.PK, F, FNEVF.PK, HINKY.PK, KKR, NKE, PCXCQ.OB, QQQ, RIG, RIMM, RNECY.PK, SHCAY.PK, SPY, TSLA

 

Top Stop Stories
Spain to reveal how much cash needs to be thrown at its banks. Spain is scheduled to disclose how much additional money its banks will require when it releases the outcome of independent stress tests on the sector later today. In June, preliminary results showed that banks would need up to €62B in a worst-case scenario. The assessments come after the government yesterday unveiled further austerity in its 2013 budget, which was well received by the market.
RIM soars despite steep losses. RIM (RIMM) shares surged 18.6% premarket after the Blackberry maker's FQ2 earnings came in better than expected, although it still swung to a loss of $0.27 a share from a profit of $0.80 a year ago as revenue slumped 31% to $2.87B. RIM shipped more Blackberries than expected, helped by emerging markets, and increased its cash position to $2.3B from $2.2B in FQ1.
U.K.'s FSA outlines Libor overhaul. Martin Wheatley, the head of the U.K.'s Financial Services Authority, has detailed a 10-point plan to revamp Libor. Wheatley's proposals include a new overseer to replace the British Bankers Association, and basing Libor on transactions rather than on estimates of where a bank thinks it could borrow from another bank. That should cut the scope for manipulation but could prove problematic during credit crunches, when institutions stop lending to each other.
Top Stock News
Nike profit drops 12% as futures orders slow. Nike's (NKE) FQ1 net income fell 12% to $567M despite revenue climbing 10% to $6.67B and beating forecasts, with higher costs and advertising spending offsetting increased sales of the company's clothing and footwear brands. EPS of $1.23 also topped consensus, while Nike's guidance for FQ2 revenue growth was in line. However, shares fell 3.65% in after-hours trading as investors fretted about the firm's slowing futures-orders growth and Chinese demand.
Chevron, Transocean hit by Brazil injunction. Chevron (CVS) and Transocean (RIG) were yesterday served with injunctions and ordered to suspend oil production and/or transportation activities in Brazil within 30 days. Both companies face civil and criminal lawsuits related to a November drilling accident at the Chevron-operated Frade offshore field.
Heineken wins battle for $6.3B APB stake. Heineken (HINKY.PK) is set to gain full control of Asia Pacific Breweries, in which it already owns 55.64%, after Fraser & Neave (FNEVF.PK) shareholders voted to sell its 39.7% in APB to the Dutch brewer for about $6.3B. The vote ends a two-month drama in which Thai billionaire Charoen Sirivadhanabhakdi threatened Heineken's plans.
Stuttering Chinese growth hits U.S. coal hard. Slowing Chinese growth is hurting the U.S.'s Appalachian coal mines and towns, with the slumping steel industry in China needing far less of Appalachia's high-grade metallurgical coal. The result is that prices have cratered and a ton of thermal coal sells for $52 vs. $65-$75 to produce it. The affected companies include Patriot Coal (PCXCQ.OB), which filed for Chapter 11 in July, Alpha Natural Resources (ANR), Consol (CNX) and Arch Coal (ACI).
Tesla increase fundraising plans. Tesla Motors (TSLA) has filed to increase the amount of common stock that it plans to offer to $225M from $150M. The filing comes after Tesla this week unveiled a charging station that offers a 150-mile range with half an hour of charging.
Sharp secures its future... Sharp (SHCAY.PK) has obtained ¥360B ($4.6B) of syndicated funding, comprising a ¥180B loan and a ¥180B credit facility that will replace an existing ¥150B arrangement. The financing will enable Sharp, which is a crucial supplier for Apple, to meet a deadline at the end of this month to redeem the bulk of ¥360B in commercial paper.
...as does Renesas, but KKR looks to be foiled. Renesas (RNECY.PK) has secured ¥161B ($2.1B) in syndicated two-and-a-half year loans from four Japanese banks. The cash-strapped company, the world's largest provider of micro-controller chips used in cars, also obtained another ¥97B in financing from the banks and from its major shareholders. The loans could put paid to KKR's (KKR) hopes of buying Renesas.
France aims to maintain influence in BAE-EADS France is concocting a scheme whereby it would obtain a 13.5% stake in the combined BAE (BAESY.PK) / EADS (EADSY.PK), the FT reports, with Germany receiving the same amount. The proposal would maintain the political influence that EADS has been stuck with and CEO Tom Enders wants to get rid of, and is likely to face opposition in the U.K. and U.S.
Car makers use "self-registrations" to boost EU sales. Hit by slumping European sales, Ford (F) and other automakers are pumping up the numbers through "self-registrations" in which dealers sell cars to themselves and then offload the vehicles to customers as second-hand cars for big discounts. The practice accounted for 30% of industry sales in Germany from January-August, said Ford Europe executive Roelant de Waard, who was speaking ahead of the Paris Motor Show, which officially starts tomorrow.
Top Economic & Other News
France plans to soak the rich to bring down deficit. France's cabinet has approved the socialist government's first budget since it gained power, with the aim being to cut the country's deficit to 3% next year. The package mainly consists of tax hikes for the rich and big business, and assumes growth of 0.3% this year and 0.8% next year. The budget comes as data shows that France's debt rose to 91% of GDP in Q2 from 86.2% a year earlier.
Renminbi touches record high. After declining earlier this year, China's yuan has continued its march higher, hitting a record 6.2856 to the dollar due to strong corporate demand and banks avoiding short positions ahead of an upcoming week-long holiday. The rise in the renminbi comes after the currency sank to a 2012 intra-day low of 6.3967 in July, since when it has benefited from the dollar's retreat in the global markets.
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Today's Markets:
In Asia, Japan -0.9% to 8870. Hong Kong +0.4% to 20840. China +1.4% to 2086. India +1.0% to 18763.
In Europe, at midday,London -0.2%. Paris -1.0%. Frankfurt -0.4%.
Futures at 7:00: Dow -0.4%. S&P -0.4%. Nasdaq -0.3%. Crude -0.1% to $91.78. Gold flat at $1780.30.
Today's economic calendar:
8:30 Personal Income and Outlays
9:45 Chicago PMI
9:55 Reuters/UofM Consumer Sentiment
1:00 PM Fed's Fisher: 'An Analysis of the Current State of the Economy and Business Environment'